For the first time, we are seeing individual US states (in this case, New Jersey) pursuing NFT-specific regulations.
Ah state billa bill titled “Digital Assets and Blockchain Technology Act” has already passed Congress and is on its way to the Senate.
Let’s take a closer look at what you need to know about this bill and its potential impact on NFTs and cryptocurrencies.
New Jersey: No stranger to crypto enforcement
New Jersey is no stranger to the concept of “cracking down on cryptocurrencies.” There are many different examples of this, but one recent memory is Celsius, the currently defunct CeFi platform. Celsius was based in New Jersey, a state he was one of the first to establish New Jersey. Crack down on Celsius’ operationSeveral other states, including Alabama and Texas, followed suit, and less than a year later, Celsius’ operations were shut down, deeming the company another bear market domino bankruptcy in 2022. .
Now state regulators are back again, this time aiming to establish a “national multi-state licensing system” for NFT issuers. At first glance, the bill, even if passed, would appear to be little more than an unnecessary and unenforceable regulation that would do little for independent creators and collectors in the state.
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What it means for crypto users
According to the proposed bill’s language, crypto users based in New Jersey cannot “engage in digital asset business activities” as a company or individual in the state unless they register for a license. The license oversees everything from custodial services to “digital asset issuance” – something as simple as issuing and selling NFTs.
Cryptocurrencies and NFTs are riddled with nuances, making regulation both necessary and daunting. Custodial services that manage the process of tokens on behalf of their customers are definitely an area that deserves regulation, but that regulation should not include the work of independent visual designers who want to create NFT collections. Unfortunately, New Jersey legislators haven’t worked to establish a term to distinguish between these two worlds.
Moreover, there is a lot to be said for enforcing this kind of regulation. Enforceability against large companies like the aforementioned Celsius is much more manageable, but the likelihood of enforcing this bill is unclear.
The cryptocurrency community is a notorious fan of anonymity and an “internet-first” way of life, with geographic boundaries essentially far removed and identity defined less than ever before. That leaves us with the belief that it will be difficult, if not impossible, for regulators to control for the general public.
At best, it may be possible to set guardrails for corporate entities involved in this area.
